Angelo Taningco
Economist, Treasury Group

The Philippines’ fiscal balance shifted to a surplus in August from a deficit in July; this narrowed the cumulative fiscal deficit position, making it less likely for the country’s government to reach its fiscal deficit targets for both the third-quarter (Q3) and the current year.

The fiscal surplus stood at P28.8 billion in August as government revenues and expenditures totaled P230.4 billion and P201.6 billion, respectively, according to the Bureau of the Treasury’s latest fiscal report released on 22 September. This was a reversal from July’s fiscal deficit amount of P50.5 billion as government revenues climbed 18.4% month-on-month (mom) whereas government expenditures dropped 17.7% mom.

Figure: Fiscal Indicators
Jan. 2016 – Aug. 2017
(P billion)

 
August’s fiscal surplus brought the cumulative fiscal deficit position to narrow to P176.2 billion covering the first eight months of the year. Compared to January-August 2016, however, this year’s cumulative fiscal deficit was 27% higher on account of faster expenditure growth (10% yoy) vis-à-vis revenue growth (8% yoy).

The government’s quarterly fiscal program for 2017 depicts the third-quarter (Q3) fiscal deficit target at P201.4 billion; we think this will not be attained given that the July-August fiscal deficit total is only P21.7 billion. For the full-year, the government’s fiscal deficit target is at P482.1 billion, equivalent to 3.0% of gross domestic product (GDP); also, we believe it would be unlikely that this target will be achieved. Against this backdrop, we maintain our fiscal deficit forecast at 2.0% of GDP.

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